Monday 26 September 2016

AIB ex-CEO throws light on our banking whodunnit

Published 30/04/2015 | 02:30

Decisions were made, and more than one fateful Rubicon was crossed as anxious bankers, advisors and officials conferred with Taoiseach Brian Cowen, and Finance Minister Brian Lenihan
Decisions were made, and more than one fateful Rubicon was crossed as anxious bankers, advisors and officials conferred with Taoiseach Brian Cowen, and Finance Minister Brian Lenihan

In the functional surrounds of the banking inquiry in Committee Room One, former AIB chief Eugene Sheehy was calmly reading from his opening statement.

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Everyone was listening with both ears, because he is one of the elite band of banking brothers who played a part in the behind-closed-doors drama of the night of the bank guarantee. He was recalling the chagrin of the bank's brass on the morning following the all-night session in Government Buildings.

"When we saw the guarantee document for the first time later that morning we could not understand why Anglo and INBS (Irish Nationwide Building Society) were included," he explained. "All our discussions that night were based upon the premise that Anglo was to be taken down."

Taken down. It's the sort of casual, swaggering language used by powerful men in conclave over serious matters. It's the argot of Tony Soprano, Paulie and Silvio hanging out in Bada Bing talking business. It's the class of phrase one imagines is deployed inside the White House Situation Room by brass-laden generals assessing threats.

But then the small group of people who were in the know on Monday September 29, 2008 were on a war footing. Decisions were made, and more than one fateful Rubicon was crossed as anxious bankers, advisors and officials conferred with Taoiseach Brian Cowen, and Finance Minister Brian Lenihan.

And six-and-a-half years later, Paddy still wants to know the story about that night. And Eugene Sheehy wove some new strands into the tangled narrative. He recounted how he and his team and his counterparts from Bank of Ireland spent six hours at the meeting, but not continuously. "We were asked to leave the room on four occasions".

In the first session, after watching the global markets totter all day, they asked for a guarantee for four banks "to stabilise the situation". In the second session, they were told Anglo was going to default, and the Government side asked the bankers for a loan to get the failing bank to the end of the week. The bankers refused. "We were asked to leave to reconsider our position," said Sheehy. So the bankers conferred, and in the third session offered €5bn for a week - on condition that the Government guaranteed the loan. There was a short session where the solvency of the banks was discussed.

"We returned to our room and at 3.30am were told we were no longer needed," he said. Sheehy and his team thought it was all sorted - but then the following morning the bombshell dropped that the Government had decided on a full blanket guarantee, including the rotting, banjaxed Anglo.

Labour senator Susan O'Keeffe asked if he had contacted the Government that morning. "The Government had made a decision. We weren't going to go out and start criticising it," he shrugged. "So you just got on with it?" she added. Eugene Sheehy nodded. "We had no choice".

It was a fascinating glimpse of the horse-trading inside the war-room on a day when it was practically raining bankers.

At the Bank of Ireland AGM, Bank of Ireland boss Richie Boucher was handed the keys to Gorse Hill by a newly-evicted Brian O'Donnell. AIB's CEO David Duffy and former CEO Michael Buckley also gave evidence about the 2008 bank guarantee.

The bankers have avoided the spotlight of late, happy to quietly flourish again like mushrooms.

But the past isn't another country, and the story needs to be told. And today's narrator is a key figure: former ECB President Jean-Claude Trichet. And perhaps another twist in this sorry, sordid saga of our broken banks will unfold.

Irish Independent

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